Arkansas Blog

Corporate welfare survives

The U.S. Supreme Court today gave a victory to corporate welfare proponents by saying taxpayers didn't have standing to sue over tax breaks extended by Ohio to land an auto plant. That's bad. But the court sidestepped the core legal argument, that it's unconstitutional for states to give differing tax treatments to lure outside development.

This link gives the summary and some useful background on the issue. The lawyer challenging the corporate welfare said in part:

The effect of the Court's ruling is not to end our challenge or to uphold Ohio's discriminatory use of its tax system to steer business investment into the state. Rather, the decision simply sends us back to the Ohio state courts, where we began six years ago. We intend to pursue the case promptly and fully in that forum, whose rules for citizen standing are far more permissive than those in the federal courts. If the Ohio state courts follow the lead of the Sixth Circuit Court of Appeals and find Ohio's investment tax credit unconstitutional, then the case can come back to the Supreme Court for a nationally applicable ruling on the merits. And, in the meanwhile, similar cases are underway in the courts of several other states.

Please note that the usual suspects -- conservative Republicans who think only working stiffs should pay taxes -- won't necessarily be rising to applaud this decision. Reason: part of the motivation for the lawsuit wasn't the unconstitutional tax giveaway to favored corporations, but the fact that private property was condemned under the ruling so it could be turned over to a Jeep manufacturer. Yes, private-to-private condemnations, as authorized by Arkansas's TIF law, can happen. Yes, you can argue it's for the common good to create thousands of jobs by such means. But don't try to tell it to people who lost their houses.